Defendant Seiscor designs, manufactures and sells COTs. Plaintiffs allege that defendant Raytheon exercised "direct and complete control" over its subsidiaries, including Switchcraft, which in turn owns Seiscor. Pay Tel seeks to pierce the corporate veil to reach Raytheon by arguing, in effect, that Seiscor is the alter ego of Switchcraft and that, in turn, Switchcraft is the alter ego of Raytheon. (Pay Tel Cmplt. P 3).
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In September 1985, Pay Tel and Seiscor entered into a "Dealer Agreement" whereby Pay Tel agreed to act as a "dealer" to sell Seiscor's COTs. (Fabrikant 6/22/94 Aff. Exh. A). The Dealer Agreement required Pay Tel, as the "Dealer," to issue a "blanket" written purchase order for a quantity of phones, which was to be the Dealer's "commitment" for six months. (Id.). At that time Pay Tel issued a blanket purchase order for 1,500 phones, which apparently was in addition to 500 phones that Pay Tel had previously ordered, for a total of 2,000 phones ordered. (DX J; Fabrikant 6/22/94 Aff. P 1 & Exh. G). Pay Tel received only 872 COTs directly from Seiscor, for which it paid some $ 665,000, but these phones purportedly turned out to be defective and began to malfunction. (Pay Tel Cmplt. PP 42-44). Seiscor refused to authorize the return of the phones, and instead induced Pay Tel to purchase replacement parts from it for some $ 400,000. (Pay Tel Cmplt. PP 47-48).

Trident entered into a dealer agreement with Seiscor, similar to Pay Tel's, in October 1985. (Exh. 3 to Pl. Mem. in Opp. to Motion). Between November 1985 and May 1986, Trident purchased 725 COTs from Seiscor. (Trident Cmplt. P 39). These also were purportedly defective. (Id. PP 40-41). Seiscor refused to accept the return of the phones, and Trident was induced into purchasing replacement parts from Seiscor. (Id. PP 45-46). Eventually, Trident simply returned the COTs to Seiscor without Seiscor's approval. (Id. P 47). Thereafter, Seiscor developed and manufactured a new, purportedly improved COT, and Trident was induced to purchase some 185 of the new phones. (Id. PP 48-53). The new telephones, however, also purportedly turned out to be defective. (Id. PP 54-55).

As noted, in January 1987, Seiscor announced that it was withdrawing from the business of manufacturing and selling COTs. It repudiated its agreements with Trident and others. (Trident Cmplt. P 57).

B. Procedural History

The Pay Tel case was commenced on March 25, 1988. Seiscor answered and asserted a counterclaim for goods sold and delivered. The Trident case was filed on August 12, 1988. Amended and second amended complaints were filed in both cases.

In March 1994, defendants moved for summary judgment in both cases. On April 26, 1994, Judge Broderick issued a Memorandum Order (signed by Judge Goettel on Judge Broderick's behalf) granting the motions and dismissing the complaints, but giving plaintiffs leave to file amended complaints.

In his decision, Judge Broderick held (1) that diversity was not complete in the Trident case because both TTS-I and Raytheon were "citizens" of Massachusetts, (2) that because plaintiffs had assigned certain claims to others, they had to either (a) eliminate any claims assigned to others as to which they had not reserved rights or (b) add as voluntary or involuntary plaintiffs any assignees or financial entities with any claim to title in any of plaintiffs' claims, (3) that plaintiffs had to (a) drop Raytheon as a defendant, (b) provide information to justify piercing the corporate veil, or (c) specify what discovery was needed to support their claim that the veil should be pierced, (4) that plaintiffs had to provide specifics as to their alleged damages, including specific information relating to (a) sales of defective goods, (b) costs incurred to repair those goods, (c) monies refunded or otherwise lost because of defective goods,
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and (5) that plaintiffs had to present or identify evidence of deliberate fraud or misleading behavior.

Pay Tel has also submitted an affidavit stating, under oath, that "no rights under any leases . . . were completely assigned. All assignments were conditional assignments where liability remained with Pay Tel." (Fabrikant 6/22/94 Aff. P 3). In addition, Seiscor's dealer agreement can arguably be read as "extending" the warranty only to the "DEALER." (Fabrikant 6/22/94 Aff. Exh. A at 6). The agreements with the finance companies also contained certain reservations or were otherwise limited. (See, e.g., Fabrikant 6/22/94 Aff. Exh. C at 3 (granting only a "first lien and security interest" to the Lender)). Finally, an issue of fact exists as to whether, even assuming any rights were assigned, they reverted back after the alleged defects in the telephones resulted in Pay Tel defaulting on its obligations under the leases. While it is true that the leases are silent on any reversion of rights, that silence certainly does not preclude the common sense conclusion that if the lessees failed to pay rent because the phones did not work, Pay Tel could seek recourse from defendants.

A jury could reasonably find from this evidence that Pay Tel had not assigned away its claims for breach of warranty.

Defendants argue that summary judgment should be granted with respect to the fraud claims because (i) Pay Tel assigned all rights to claims based on representations and (ii) neither Pay Tel nor Trident has presented sufficient evidence of fraud.

The argument that Pay Tel lacks standing is rejected, for the reasons set forth above in the discussion of the breach of warranty claims.

Likewise, the argument that plaintiffs have failed to submit sufficient evidence of fraud to raise an issue of fact is also rejected. In opposition to the motion, plaintiffs have submitted affidavits in which officers of Trident and Pay Tel state, under oath, that Seiscor represented to them that the COTs had been field tested and worked well. (See, e.g., Fabrikant 9/20/94 Aff. PP 7(a), (b), (d); Petta 4/19/94 Aff. P 46; Petta 9/21/94 Aff. PP 7, 8). Plaintiffs have also submitted two documents from which a reasonable jury could conclude that those representations were false and misleading: the internal March 20, 1986 memorandum by Phil Deck states that Trident has been used as "a field test bed" (Pl. Mem., Exh. A), and the internal September 26, 1985 memorandum by Steve Kartchner states that it would be "desireable [sic] to rework all phones," but nevertheless recommends that Seiscor "continue to ship phones, as is, until we are ready to fill orders with reworked phones." (Pl. Mem., Exh. Q). This evidence is sufficient to present a triable issue of fact, and thus this prong of defendants' motions is denied.

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